(Photo: The Canadian Press)
What to do with National Bank, Stella-Jones and Scotiabank securities? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a totally different opinion from that expressed by the analysts.
National Bank (NA, $103.16): the Quebec bank stands out in the first quarter
National Bank exceeded expectations in several respects as evidenced by the appreciation of almost 3% of its shares at mid-session on March 1st.
Adjusted net income of $2.56 fell 3%, but the consensus was $2.37 per share.
Scott Chan of Canaccord Genuity reports that revenue and profit before tax and allowance for credit losses, the benchmark for fundamental bank performance, advanced across all divisions.
Overall, the 7% increase in income and 29% in net interest income offset the 9% increase in expenses, the analyst said. Result: Profits before tax charges and provision for credit losses increased by 5%.
The main personal and commercial banking division increased its total revenue by 17% to $1.1 billion thanks to growth in the number of loans (+ 8%) and the net interest margin to 2 .05 to 2.35%. Its profits before tax charges and provision for credit losses jumped 29%.
The wealth management division increased its profit by 16% to a record while its profits before tax charges and provision for credit losses rose by 18%. Rising interest rates boosted revenues by 8% and attracted deposits.
The division that includes US specialist lender Credigy and Cambodian bank ABA Bank also performed well. At ABA, the number of loans jumped 31% while revenue rose 14%.
Despite these strong results, Scott Chan is not touching his “hold” recommendation until the 1:00 p.m. teleconference. The bank’s price is already at its target price.
The analyst is waiting to learn more about the loan loss provisions of $86 million made in the first quarter, which are significantly lower than his expectations of $132 million and the consensus of $96 million.
The institution continues to target an impaired loan loss reserve ratio of 15 to 25 percentage points, a range consistent with that prevailing before the pandemic.